Naval’s new campaign against the SEC proposed rules regulating general solicitation is the news of the week. It’s a political mistake.

The problem to be solved is a lack of trust between us and DC bureaucrats, not overly restrictive rules. The rules themselves could be workable if we trusted in their implementation.

First off, since the 1929 crash, private investment has been restricted to those with a certain level of net worth—called accredited investors—determined to protect the average person from investing without expert advice (brokers) and scams and the economy as a whole from lemming-like bubbles. Further, startups have been restricted in their communications during periods of raises, especially regarding sharing key information about their raises and traction metrics.

The JOBS Act allowed for more open communications—called general solicitation—but the new rules say if you screw up, you can face a year ban from further fundraising, which would kill startups.

If you’re a bad actor, such bans protect the pool; if you’re an honest startup, identified as a bad actor by the bureaucrats, you’ve just entered the deadpool. Naval and others don’t trust the bureaucrats to tell the difference or to understand the costs of compliance, especially out on the bleeding edge. Judging from the startup immigration experiences I’ve been part of second-hand (“oh, so you sell software? let’s see the CDs” “uh… cloud?”), Naval et al. are right to be skeptical.

But politically, it’s a mistake. Consumer protection and existing securities interests have long been opposed to the JOBS Act and are quiet causes for many of the delays, as we have mostly ignored implementation after the bill passed. At this point, we’re in a hole, having been disengaged this past year and change. To come in shouting now comes across as usual tech-in-politics arrogance.

Aside from dislike of the ban, the rest of Naval’s proposed fixes can be implemented in practice, such as opening up APIs to allow submission of required forms, rather than needing to be codified in the regulations. Broadly, his memo comes down to “we don’t trust you not to screw this up,” since how can you trust someone to provide accurate oversight when they don’t know the difference between a pitch deck and term sheets?

We don’t build trust by making demands, yet obviously DC won’t understand our proposed tech-driven solutions to the problems their well-intentioned rules seek to solve. What would be a better solution?

Since we can no longer turn back the clock to put more pressure on DC to implement the regulations called for in the JOBS Act, the best approach would be for Naval to organize a hackathon with attendance from DC staff to explain what an API is or how it could be used to automate information transfer from startups to investors or government agencies.

The consumer protection and securities interest groups have spent this past year raising fears about the JOBS Act, and a single big push by us will do more to drive away regulators than make them understand our fears. We need an ongoing dialogue, not a “rush to the barricade” moment.

Sens. Charles Grassley (R-IA), Mitch McConnell (R-KY), and John Cornyn (R-TX), Ranking Member of Senate Judiciary and top Republican Leadership, whose support would signal a massive Legislative backlash against Executive surveillance

Immigration

With the Senate wrapped up, the House of Representatives is under increasing pressure to pass one or severalimmigration reform bills—anything at all would be nice. We have some signals from the Senate vote [PolitiHacks analysis], and we heard back in January that leaders in the House of both parties assign a 40-60% chance of success. Advocacy and lobbying will pivot over this next week from Senate to House.

Moran, Warner-Udall, and Shaheen startup visa amendments did not receive votes, as only 10 amendments out of more than 500 submitted were voted on

Rep. Darrell Issa (R-CA) successfully sees SKILLS Visa Act through House Judiciary Committee markup 20-14 on party lines with minor improvements made—contains startup visa, though based on original Startup Visa Act of 2010 rather than improved later versions

Primarily addressing establishment industry backlash against startup disruption, this week has two good examples on why unspecific political power is not enough to hit the political system and get a desired outcome—the first step of any successful political fight is identifying decision makers [PolitiHacks Analysis].

Tom Kalil, Nick Sinai, and Doug Rand; White House Office of Science and Technology Policy (OSTP)—Someone in OSTP will be tasked with the official response to the Tesla petition, which now has 75k signers and a week left; it’s an office more should be aware of

Campaigns and Elections

Expect Representatives and Senators to visit the Bay Area for fundraising and mixers during this weekend recess.

Senate Republicans voted against the bill 14-32, meaning that an approximate percentage of House Republicans in support would give a majority of the House (201 Democrats + 71 Republicans) in favor of a comprehensive bill, if it were to be allowed to come to a vote—a gross oversimplificiation

The question is whether or not Democrats can get a bill they’re happy with to a final vote, as it’s got decent odds of passing. We might see the discharge petition used as a lever to accomplish this goal, which is rare.

Alternatively, Republicans pass a series of immigration bills and head to a Senate-House conference to iron out the differences. Assuming Democrats succeed in conference in insisting on many of the Senate details, the House response to a final conference report that a majority of the majority is unhappy with will be very interesting.

Decision-makers in politics are not always the obvious leaders. While you can always target the President through the We the People platform, often times Congress or specific Members make the final decision on an issue. Or for ultra-narrow issues, a specific staffer or bureaucrat makes the call.

Further, rarely are political decisions made on a handshake like in the startup world, and even more rare is when a handshake agreement is completed without staff-level follow up. Elected officials are more like a non-executive board chairman than a CEO, as they are symbol as much as executive.

In the run-up to its statement on SOPA, the White House hosted meetings with top executives at record labels (RIAA) and movie studios (MPAA) on the one hand and tech VCs and executives on the other. In the end, they decided to support the latter. That decision resulted in the Senate consensus on PIPA falling apart following the initial collapse of SOPA in the House.

Simple? Not so fast. House Majority Leader Eric Cantor made a stand-alone decision based on public outrage several days before the White House moved to announce that even if SOPA was ready for a final vote, he wouldn’t schedule one. Even if the White House had released its statement earlier, Eric Cantor is not one to follow the lead of President Obama.

Who in the tech community targeted Eric Cantor on SOPA?

When it comes to taking effective action in the political space, the best first step is to figure out whose decision matters. It’s not always the person with the most generic political power.

When it comes to the House on immigration, President Obama doesn’t matter—Rep. Bob Goodlatte matters, who chairs the Committee that oversees all immigration bills. Bob is from Roanoke. Virginia Tech is just outside his district, with many students born and raised within his district, and all elected officials know that they need to listen to their districts to get reelected.

So if you need to convince Bob on something that matters to startups, you can start by convincing the excellent Hokie entrepreneurs to become evangelists to bring a local voice to Bob.

Aaron’s Law introduced by Rep. Zoe Lofgren (D-CA) to reform Computer Fraud and Abuse Act (CFAA)—the bill has support from both Republicans and Democrats but needs support from currently-noncommital Rep. Bob Goodlatte (R-VA), as Chair of the Judiciary Committee, to move forward

PRISM and related phone wiretapping is a huge story, still breaking, because sources are frequently, honestly wrong. Will PRISM be a bombshell or a yawn? Still too soon to tell.

What to know:

More details about PRISM are coming out—the AP dives into the history, Protect America Act, and explains a wider set of data collection than previously known, while the Washington Post quietly wiped (updated) several of its more incendiary claims but continues to break new ground in its reporting.

EFF, Mozilla, reddit, and many other groups (including PolitiHacks) launch StopWatching.us to mobilize the internet community to oppose these recently uncovered programs

The Senate opened up debate on Tuesday with two procedural votes, with an additional vote scheduled and withdrawn on Monday. These two votes passed first 82-15, then 84-15. They represent a big win for immigration reform supporters.

What happened here is that for cloture votes, the Majority Leader generally files three to build in flexibility for situations like this one, as each cloture filing takes a minimum of one day and an hour to be ready for a vote, referred to as ripening.

Here’s what happened. In the first case, Sen. Reid’s cloture motion was ripe and voted on, requiring a 60 vote minimum to succeed. Cloture is the inverse to the filibuster, i.e. unlimited debate, so a cloture vote is to end debate.

In this case, the base debate was on whether or not to begin debate on the Comprehensive Immigration Bill. Confusing, yes. Following the successful ending of the base debate, the Senate proceeded to vote to begin debate on the bill itself, which also succeeded.

That’s where the situation in the Senate stands now—we’re on to the legislation itself.